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After years of reportedly tiptoeing around it, Apple finally unveiled its plan to introduce a mobile payments platform with the goal of modernizing the way customers shop with credit cards.

The new service, called Apple Pay, was announced during Apple's big media event on Tuesday. It uses Near Field Communication (NFC) to enable users to make payments in stores simply by swiping their phones.

Tim Cook, Apple's CEO, introduced the product by noting that most consumers and businesses still rely on a "fairly antiquated payment process," and one that isn't as secure as many would hope. "We're totally reliant on the exposed numbers," Cook said in the presentation, "and the security codes that all of us know aren't secure. It's no wonder that people have dreamed of replacing these for years. But they've all failed."

Image: Mashable

Apple Pay works by letting users scan their credit cards, from MasterCard, Visa or American Express, and then upload that information into the Passbook app. Rather than rely on the traditional 16-digit credit card number, shoppers receive a digital token that is unique to each device and can only be used with that device.

"Making a payment isn’t the hardest thing in the world. What we think is more important if you are going to run a payments service on a massive basis is that you can support all the non-happy path transactions: supporting the customer, helping people when they’ve lost cards," says Matt Dill, SVP of innovation and strategic partnerships at Visa, explaining the company's decision to partner with Apple.

In addition to the tokenization plan, Apple's execs also noted that the user can suspend payments from their iPhone if the device is lost or stolen. The hope is that these features can improve security by limiting the customer's exposure.

The payment option will also work with Apple Watch, the new wearable device unveiled at the event and expected to go on sale in early 2015.

Apple Pay will work at more than 200,000 merchants, including at stores from big names like Disney. The system will integrate into apps from Target, Groupon and OpenTable.

"It's a revenue opportunity. It's a business model opportunity. It’s an integration point across multiple parts of their business and their partners' businesses," Van L. Baker, an analyst with Gartner, told Mashable in an earlier interview about why Apple may embrace payments. "There's just a lot of things that line up that says this is the right time to do this."

Despite the many rumors to the contrary, Apple opted to stay clear of full-fledged mobile payments solution in recent years. Instead, it laid the tracks little by little: In 2012, it introduced the Passbook application for storing coupons, tickets and loyalty cards. More recently, it introduced the Touch ID fingerprint scanner and an API for it paving the way for more secure applications.

As many have pointed out, Apple also has some 800 million iTunes accounts, many of which have credit card information linked to it.

Multiple researchers have projected that mobile payment volume will surge in the coming years, with Gartner estimating that total transactions will hit $720 billion in 2017 and IDC estimating mobile payments will top $1 trillion in 2017.

Apple is expected to take a cut of each payment transaction processed through the platform, perhaps providing another significant revenue stream that could also help its bottom line.

Apple iPhone 6 Event

The iPhone 6 and new Apple Watch on display in Apple's Hands-On Pavilion.

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The iPhone 6 on display in Apple's Hands-On Pavilion.

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The iPhone 6 and new Apple Watch on display in Apple's Hands-On Pavilion.

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The interior of the Hands-On Pavilion gallery where audience members can view the newly unveiled iPhone 6, iPhone 6 Plus and Apple Watch.

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Tim Cook bids the audience farewell.

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Tim Cook and U2 lead singer Bono announce the band's free new album (available to iTunes Store customers) and conclude the Apple event.

U2 performs a single from their new album Songs of Innocence at the Apple event in Cupertino, California.

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Kevin Lynch discusses the apps available on the Apple Watch and how to use them.

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The different variations of the new Apple Watch. It is customizable with different bands, metals, and design elements.

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Kevin Lynch shows the audience the new Apple Watch

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After unveiling the iPhone 6, iPhone 6 Plus and Apple Pay system, Tim Cook prepares to announce one more thing.

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Examples of what the new Apple Pay system will look like on the new iPhone 6 and iPhone 6 Plus.

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Eddy Cue explains how Apple Pay works and the locations to use it.

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Tim Cook introduces the new Apple Pay system.

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iPhone Size Comparison Chart

Image: Bob Al-Greene/Mashable

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The iPhone 6 and iPhone 6 Plus will use iOS 8.

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A representation of the new landscape view of the iPhone 6.

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Phil Schiller talks about iPhone 6.

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iPhone 6 has a 4.7-inch display. iPhone 6 Plus has a 5.5-inch display.

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iPhone 6 and iPhone 6 Plus are revealed.

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Tim Cook walks onto the stage at the Flint Center in Cupertino, California.

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Attendees waiting in line, anticipation is building.

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A mysterious big white box is on display outside of the Flint Center in Cupertino, California.

Image: David Paul Morris/Bloomberg/Getty Images

Today, Apple Inc. is expected to unveil redesigned iPhones with bigger screens, overhauling its top-selling product in an event that gives the clearest sign yet of the company's product direction under Chief Executive Officer Tim Cook.

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